Question: A. Draw a basic swap diagram outlining the swaps undertaken by Hipgnois in the article titled NOW HIPGNOSIS SONGS FUND LOCKS IN INTEREST RATE SWAPS,

A. Draw a basic swap diagram outlining the swaps undertaken by Hipgnois in the article titled NOW HIPGNOSIS SONGS FUND LOCKS IN INTEREST RATE SWAPS, PROVIDING LONG TERM CERTAINTY TO COST OF BORROWING (make sure to label everything use the rates in the article for and just show Hipgnois and their direct counterparty)

B. b) If there is a recession in the next year and the Federal Reserve switches its policy and starts to decrease the level of interest rates causing most interest rates in the economy to decrease, including LIBOR, will Hipgnoiss effective borrowing costs change? (Could Hipgnois have been better off without the swap in this scenario? What is the key assumption about the swap that has to be made to answer if their effective borrowing costs change or not?)

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